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Since affordability is constantly discussed on CD, this new map comes via The Washington Post on housing affordability for the top 27 metro areas regarding median home price.
To me, this map makes pretty clear that the high incomes that so often touted in many cities have essentially become meaningless in terms of purchasing power.
Since affordability is constantly discussed on CD, this new map comes via The Washington Post on housing affordability for the top 27 metro areas regarding median home price.
To me, this map makes pretty clear that the high incomes that so often touted in many cities have essentially become meaningless in terms of purchasing power.
I disagree regarding your assertion of diminished purchasing power. For example the average income of one individual in the Washington DC metro is 64K, with the average couple (more likely to be buying versus renting) representing 128K, and with the DC area sitting at 77K according to your link...a fairly comfortable margin. Real estate is based upon a market economy and wouldn't function without the affordability factor. Current sales of existing homes is comparable to 2002 when the overall market was well on the rise and is very close to the 5 year high.
I disagree regarding your assertion of diminished purchasing power. For example the average income of one individual in the Washington DC metro is 64K, with the average couple (more likely to be buying versus renting) representing 128K, and with the DC area sitting at 77K according to your link...a fairly comfortable margin. Real estate is based upon a market economy and wouldn't function without the affordability factor.
This pertains to medians--not averages. We all know that averages are heavily skewed by a small cohort of extremely high wage earners.
Using your example, the median HHI in the DC metro, as of 2012, is estimated at $88,223: http://www.census.gov/prod/2013pubs/acsbr12-02.pdf. That still means that the median household can afford a home, but the "cushion" is not nearly as great as your suggesting. Even more troubling is that the median household income in several cities is below the income necessary to afford a median-priced home, such as Boston, New York, Seattle and especially San Francisco.
At any rate, the point of diminishing purchasing power obviously still stands, as that is exactly what this map indicates.
Quote:
Originally Posted by kyle19125
Real estate is based upon a market economy and wouldn't function without the affordability factor. Current sales of existing homes is comparable to 2002 when the overall market was well on the rise and is very close to the 5 year high.
That doesn't consider current trends of 1) Investment buyers, which definitely makes up a large share of sales in speculative cities; 2) Sales in more expensive cities are largely being driven by affluent, older households, as first-time homebuyers are definitely concentrated in less-expensive markets. Younger people are very often forced to rent as opposed to buy; 3) The market doesn't simply "sort itself out" if people continue to just pay more of their income towards housing, which is exactly what has been happening.
So basically Florida, Georgia, Texas and Arizona are the way to go for good weather and cheap easy living. It's no surprise those 4 states are always among the fastest growing
This pertains to medians--not averages. We all know that averages are heavily skewed by a small cohort of extremely high wage earners.
Using your example, the median HHI in the DC metro, as of 2012, is estimated at $88,223: http://www.census.gov/prod/2013pubs/acsbr12-02.pdf. That still means that the median household can afford a home, but the "cushion" is not nearly as great as your suggesting. Even more troubling is that the median household income in several cities is below the income necessary to afford a median-priced home, such as Boston, New York, Seattle and especially San Francisco.
At any rate, the point of diminishing purchasing power obviously still stands, as that is exactly what this map indicates.
That doesn't consider current trends of 1) Investment buyers, which definitely makes up a large share of sales in speculative cities; 2) Sales in more expensive cities are largely being driven by affluent, older households, as first-time homebuyers are definitely concentrated in less-expensive markets. Younger people are very often forced to rent as opposed to buy; 3) The market doesn't simply "sort itself out" if people continue to just pay more of their income towards housing, which is exactly what has been happening.
It's really just simple math that doesn't add up.
The it's all somewhat baffling when one considers Washington DC proper for example, where over the past 10-15 years (and currently) home sales have been trending upward to the extent where the city is now among the fastest growing in the country. I highly doubt it's the more affluent who are giving in to setting up house in places like McLean, Bethesda and Reston for DC neighborhoods like Shaw, Bloomingdale or Columbia Heights. Furthermore banks are no longer allowing the type of lending that allows for simply giving up more of one's income to afford housing.
So basically Florida, Georgia, Texas and Arizona are the way to go for good weather and cheap easy living. It's no surprise those 4 states are always among the fastest growing
That's a bit overly simplistic. If everyone moved to those four states automatically living becomes "cheap and easy"?? Having the necessary job skills (and actually getting hired) for the limited number of jobs available that pay a living wage or better in those states is more the key.
The it's all somewhat baffling when one considers Washington DC proper for example, where over the past 10-15 years (and currently) home sales have been trending upward to the extent where the city is now among the fastest growing in the country. I highly doubt it's the more affluent who are giving in to setting up house in places like McLean, Bethesda and Reston for DC neighborhoods like Shaw, Bloomingdale or Columbia Heights. Furthermore banks are no longer allowing the type of lending that allows for simply giving up more of one's income to afford housing.
Considering all of the neighborhoods you've suggested now have median home prices in the 500-700K range, the lion's share of sales surely aren't from recent college grads earning 40-50K/year (unless they're trust fund babies, and believe me, I know many young people here are being bankrolled by the 'rents). There's no question that DC has largely priced-out middle class households.
It would be interesting to see a recent list of disposable income in cities too.
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